RXi Pharmaceuticals Corporation (RXII-NASDAQ)

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March 26, 2010 Issue

The Most Powerful Name In Corporate News and Information


RXi Pharmaceuticals Corporation’s New President And CEO, Noah D. Beerman Has The Company Focused On Identifying The Best Opportunities For Their RNAi Technology, Selecting Specific Development Candidates And Formalizing Their Relationships With Corporate Partners

Company Profile:

RXi Pharmaceuticals is a discovery-stage biopharmaceutical company pursuing the development and commercialization of proprietary therapeutics based on RNA interference (RNAi) for the treatment of human diseases. RXi has a comprehensive therapeutic platform that includes both RNAi compounds and potential delivery methods. RXi uses its own version of RNAi compounds -- rxRNA™ -- designed specifically for therapeutic use and contains many of the properties needed to move RNAi-based drugs into the clinic. RXi Pharmaceuticals believes it is well positioned to compete successfully in the RNAi-based therapeutics market with its accomplished scientific advisors, including Dr. Craig Mello, recipient of the 2006 Nobel Prize for his co-discovery of RNAi; a management team that is experienced in developing RNAi products; and a strong early intellectual property position in RNAi chemistry and delivery.

Noah D. Beerman, President and Chief Executive Officer

Mr. Beerman has over 25 years of experience in the biopharmaceutical industry. He has extensive expertise in building and advancing biopharmaceutical product pipelines as well as leadership experience in business management and operations. Mr. Beerman served as Executive Vice President, Chief Business Officer at Indevus Pharmaceuticals, Inc. until the company’s acquisition by Endo Pharmaceuticals in 2009. While at Indevus, Noah was responsible for the development and implementation of the company’s corporate development strategy to ensure near-term and long-term growth and success. Noah was also responsible for overseeing Indevus’ acquisition of Valera Pharmaceuticals in 2007 and for managing the integration activities with Endo as part of this transaction.


Prior to joining Indevus, Noah was vice president responsible for health care at Technology Management and Funding (TMF). He previously served in a variety of business development and scientific capacities at Creative BioMolecules, Sandoz AG, and Repligen. Mr. Beerman holds an M.B.A. from Northeastern University's High Technology Program graduating Beta Gamma Sigma, and a B.S. in molecular genetics from the University of Rochester graduating Phi Beta Kappa, Magna Cum Laude.


RXi Pharmaceuticals Corporation
60 Prescott Street
Worcester, MA 01605
Phone: 508-767-3861


Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – March 26, 2010

Mr. Beerman, you have taken over recently as CEO; what is the vision under your leadership and what kind of changes might we expect if any?

Mr. Beerman: I would like to start by saying that RXi Pharmaceuticals has done an excellent job in building an outstanding platform of technology in the RNAi space. This includes terrific people who are running the company as well as outstanding scientific advisors on our scientific advisory board including Dr. Craig Mello, who won the Nobel Prize in 2006. I joined the company in November of 2009 and my goal and vision for the company is along three lines. First, we need to focus our efforts on specific therapeutic areas, which have the greatest potential and opportunity for our novel technology. The company has historically presented a number of opportunities that are worthy of further development, however one of our challenges for RXi’s technology is focusing on a manageable number of disease areas and product candidates that can be successfully pursued.  While it is often difficult for early stage companies to be able to effectively focus on specific areas that have particular value and opportunity, we are aggressively working to do this as we take the company forward. A second area is to select specific candidates for the company to take into development. This allows us to establish a pipeline of product candidates within those specific therapeutic areas of interest. We believe our technology is capable of delivering unique and high value candidates, and our success will in part be dependent on our ability to drive products into and through development. Third, while the company has done an excellent job in securing collaborations with a variety of different types of organizations including academic groups as well as initial collaborations with pharmaceutical companies, we are quite determined to formalize broader relationships with potential partners. A major emphasis and a significant component to the company’s strategy is to have active collaborations and partnerships that help advance and validate our technology, while providing us with additional resources and unique opportunities in specific therapeutic areas. Because of the breadth of RNAi technology, and RXi’s technology in particular, we believe there is great potential in forming collaborations with other companies and institutions. This is the beauty of the RNAi platform that we have - it has unlimited opportunity, but once again we need to focus on those areas that have the greatest potential for the company and our partners.


CEOCFO: Would you explain your RNAi technology?

Mr. Beerman: Very simply, 

RNA interference (RNAi) is a naturally occurring mechanism whereby short, double-stranded RNA molecules interfere with the expression of genes in living cells. This mechanism has the potential to be harnessed to "silence" or specifically block the production of disease-causing proteins before they are made. This technology can potentially be used to treat human diseases by "turning-off" genes that lead to disease in the first place. RXi is using our unique form of RNAi technology, which we call rxRNA to develop molecules targeting disease-causing genes. In fact, I can give you an example of one of the original experiments that identified the RNAi mechanism. There was a group that was attempting to cause a purple flower to become more purple, and they knew the gene that coded for purpleness. Therefore, they introduced that gene using this RNA molecule into a cell and instead of the flower becoming more purple, it became white. The reason it became white was because the piece of RNA that was introduced into the cell was recognized by the RNA interference machinery and destroyed the ability of the flower to make the purpleness protein. So if you think of purpleness as the protein that is a deleterious or disease causing protein, then this technology was used to reduce the purpleness, and in that case silenced the purpleness in the flower.


CEOCFO: What is different about your RNAi technology?

Mr. Beerman: First of all, the industry itself is relatively young - the technology was only discovered about a decade ago. One of the greatest challenges in the industry is the delivery of RNA molecules into cells. This can be accomplished through a variety of delivery vehicles, which could be combined with proprietary RNAi molecules, but also we are also developing an approach using RNAi molecules, which can be delivered without a separate vehicle. It is also important to realize that RNA is not in itself a drug, so we have to do things to the RNA molecule to make it act like a drug. There are many different types of drugs, many of them you know very well, such as proteins, antibodies, and traditional small molecules, but RNA was not designed by nature to be a drug in and of itself. RXi has developed a unique type of RNAi molecule, which we call sd-rxRNA™. SD for self-delivering and rxRNA is our brand of RNAi molecules. The self-delivering rxRNA has various proprietary components that allow the RNAi molecule to act more like a drug than some other molecules. There are other types of modifications and moieties, which we attach to the RNA that make it act more like a drug, but importantly we believe it is the self-delivering model that makes this particularly exciting. What this means is it doesn’t need an additional delivery vehicle as other, current RNAi technologies do, to deliver the payload, the RNA molecule to the cell, which is one big differentiator.

We also have other technologies, which do use delivery vehicles and those delivery vehicles we believe are also unique and proprietary. Some of them are oral and some are injectable, but in all cases, we believe that they are highly differentiated. So in this case we would have an RNA molecule and a separate delivery vehicle that are put together and introduced into the cell.


A final important aspect of our technology is our intellectual property position. First, we are very confident that our intellectual property is unique in terms of the size and make-up of our RNAi molecules. Second, we also believe that because of their uniqueness, our RNAi molecules are distinguished from the typical siRNA molecules. In addition, much of our IP has early priority dates, which gives us an additional advantage.


So if I were to sum up what we believe differentiates RXi’s technology, there are delivery advantages, a variety of technologies that make the molecules unique and more drug-like, as well as solid intellectual property underlying the molecules themselves and delivery technologies.


CEOCFO: Let’s go back to the three things that are part of the vision; what are you doing today to start achieving the goals and what indications are you looking at first?

Mr. Beerman: The company has done an excellent job in the past at looking at a variety of therapeutic areas and trying to cross cut the opportunities in these areas with the benefits of our technology. We are going to ramp this up a notch and explore in further detail through an organizational effort the host of areas that we can pursue. In the past we have disclosed a number of different areas that we can potentially advance into development, some of them are topical or local, for instance the skin, eye, lung, etc. In addition, some of these therapeutic areas are systemic for instance oncology, inflammation, and metabolic diseases such as diabetes and obesity, as well as a number of other areas. There is a great list of opportunities, but again we are putting forth a concerted effort to really try to dig deeper into those areas, which have the greatest opportunity for RXi and our partners. We are looking at a combination of the technological benefits, the competitiveness of the market, the level of unmet medical need, the regulatory parameters that exist in getting products to development and through development, the intellectual property, etc. I don’t see us rewriting the script here, but I see us honing in because all companies have limited resources and we need to make sure that we are pursing those areas with the greatest opportunities. These would also form the basis for our selection of candidates to move into development, another important goal for the company. I would also like to point out that because of the very broad nature of RNAi technology per se and our technology in particular, we will still have the ability to pursue collaborations and partnerships in other therapeutic areas, which the company itself may not be pursing directly.


CEOCFO: Would that be licensing your technology?

Mr. Beerman: We intend to license the use of our technology and form additional collaborations for specific applications and specific targets. This is consistent with other partnering and licensing approaches used in the biotechnology industry, including with RNAi technology.


CEOCFO: What is the level of pharma’s interest as an industry in RNAi?

Mr. Beerman: That is another great question. Historically with new technologies, pharma is quite interested once they start to understand the nature and potential of these technologies. There is a pretty good paradigm that exists where smaller companies like ourselves have the ability to generate the new technology that becomes an opportunity for larger companies to tap into. One of the companies here in the Boston area called Alnylam is one of the early companies in the RNAi space and they have done a terrific job at forming high-value pharmaceutical collaborations with a number of different companies. This has set the stage for other companies to do this. Another successful outcome occurred when Merck acquired Sirna, a small RNAi company for $1.1 Billion in late 2006. Over the last few years there has been some discussion about these types of collaborations waning a little bit or the size of the collaborations waning. My personal view is that because the technology is still young, we don’t know yet which delivery vehicles, which targets, which molecules, or which of these areas will ultimately pan out sooner than later. Certainly we believe there will be important and potentially revolutionary new drugs emerging from RNAi, but right now we still have a great deal of work to do. Therefore, pharmaceutical companies are often looking for multiple approaches to get to the discoveries they need to get to these new pharmaceuticals. What we are seeing is that potential partners are looking very actively and we see this for collaborations not just with one RNAi technology or company, but also with more than one. For example, company A could be a partner for a certain area and company B for another area, or partners could be interested in accessing multiple technologies with the same company. We believe this provides RXi an excellent opportunity for important partnerships to be formed given the breadth and unique nature of our RNAi therapeutic platform. Further, given the positive trends we are seeing in the markets in general, we feel larger potential partner companies are putting their resources behind collaborations. Throughout the history of biotech, this is something that has been very commonplace. It has its ups and downs in terms of how many collaborations are struck in any given time, but this is a fundamental nature of our business and we remain very excited and continue to believe in the importance of collaborations going forward.


CEOCFO: What is the financial picture like for RXi today?

Mr. Beerman: We are a public company and we trade on the Nasdaq under RXII. The company has been public for about two years and historically we have always had appropriate financing to take the company forward; and this is no different today. As with many companies in our space, we are also looking to raise additional capital, but as of right now, we are in good shape.


CEOCFO: Would you tell about the Frost & Sullivan award?

Mr. Beerman: Certainly, we are honored to have received the Frost & Sullivan award for the RNAi Technology Innovation of the Year. This was a very exciting event for us and recognizes the hard work at the company and unique and robust RNAi therapeutic platform. It happened in November and it is always good to be recognized as a leader in our field, and Frost & Sullivan is certainly a leader in their field.


CEOCFO: Is the investment community paying attention to RXi?

Mr. Beerman: Interestingly the RNAi space is relatively small. There aren’t an infinite number of companies, which is nice because we are not competing with fifty other companies for attention. Further, in the public sector there are only a handful of companies in our space. So by definition, we receive a fair amount of attention since there is a limited universe of companies and not a lot of noise out there. While we do have the benefit of others following what we do, this also means we are sometimes under the magnifying glass as a small public company. This is not so bad, and again we have people who are interested in what we are doing and we have investors and analysts who actively follow RXi, as well as perspective investors who we would like to follow us even more.


CEOCFO: Why should potential investors pick RXi Pharmaceuticals out of the crowd?

Mr. Beerman: I will go back to some of the unique benefits of the technology. First of all, it is what we have today, which includes our unique self-delivering rxRNA, additional rxRNA molecules and vehicles that help to efficiently deliver them, the ability to generate drug-like RNAi molecules using these technologies, as well as unique intellectual property that is very powerful and differentiated from our competition. We also have an outstanding group of scientists and individuals within the company who have gotten us to where we are in short order and who are well positioned to take the company forward, and of course we have a terrific scientific advisory board led by recent Nobel Prize winner, Dr. Craig Mello. We expect to stay on the cutting-edge of developments in RNAi technology with the potential to leap-frog over some of the competition in terms of the ability to create molecules with true therapeutic potential.


CEOCFO: Final thoughts, what should people reading about RXi Pharmaceuticals remember most?

Mr. Beerman: People should look at RXi during 2010 and thereafter, as we evolve from being more of a research-focused company based on our RNAi therapeutic platform to one who is applying this technology in the development of pharmaceutical candidates. We will be providing further guidance and articulating specific therapeutic areas and disease targets of focus for the company. Our goals also include identifying development candidates to take into pre-clinical and ultimately clinical development, and consummating corporate partnerships, which should bring additional value to the company and our shareholders.


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People should look at RXi during 2010 and thereafter, as we evolve from being more of a research-focused company based on our RNAi therapeutic platform to one who is applying this technology in the development of pharmaceutical candidates. We will be providing further guidance and articulating specific therapeutic areas and disease targets of focus for the company. Our goals also include identifying development candidates to take into pre-clinical and ultimately clinical development, and consummating corporate partnerships, which should bring additional value to the company and our shareholders. - Noah D. Beerman

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